U.S. Judge Bars Arbitrum DAO From Moving $71M in Frozen ETH Tied to KelpDAO Hack

A federal judge in the U.S. District Court for the Southern District of New York has issued an injunction preventing Arbitrum DAO from transferring roughly $71 million worth of ETH that was previously frozen in connection with the KelpDAO hack, according to court filings. Plaintiffs say they intend to use the frozen assets to satisfy unpaid judgments stemming from North Korea's long-running acts of terrorism, kidnappings and other alleged offenses. The filings show the plaintiffs requested permission to serve Arbitrum DAO through alternative means and argued the DAO should be treated as a liable "partnership." The court also pointed to Arbitrum DAO's Security Council, which is governed by ARB token holders and can take action in emergency situations. The judge noted that individuals who decline to comply with the order could face legal repercussions, including contempt of court. Market observers see the dispute as a potential milestone for DeFi, raising the prospect that U.S. courts may directly constrain DAO governance and intensifying the regulatory and compliance scrutiny facing protocols under existing legal frameworks.